AIM movers: Active Energy Group agrees settlement and KEFI Gold and Copper fundraising.

Andrew Hore
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AIM movers: Active Energy Group agrees settlement and KEFI Gold and Copper fundraising.

Active Energy Group (LON: AEG) has agreed a settlement with Player Design Inc, which was constructing a CoalSwitch plant in Maine. Active Energy Group will receive a cash payment of $1.65m, but Player Design will retain IP rights that were developed while the plant was being developed – but not Active Energy Group IP. All legal claims have ended. The share price has more than doubled to 0.675p.

Empire Metals (LON: EEE) says study results for the Pitfield project in Western Australia show favourable mineralogy and metallurgy in the high-grade titanium samples. This should simplify processing. Around two-thirds of the contained titanium is titanite, which can be processed at low temperatures. The overall end product would be ideal for a titanium dioxide pigment producer.  The share price rose a further 19.2% to 10.25p.

Harland & Wolff (LON: HARL) has been awarded preferred bidder status for the Falkland Islands Port Replacement Project. This could generate revenues of between £100m and £120m over two years. The project should start this year. It involves constructing four floating pontoons. The share price improved 11.1% to 11p.

Tulip Oil’s stake in Beacon Energy (LON: BCE) has been diluted from 31.8% to 23% following the recent placing at 0.05p/share. The share price is 5.56% higher at 0.0475p.

FALLERS

KEFI Gold and Copper (LON: KEFI) announced a fundraising after the market closed on Monday. The miner raised £4.5m via a placing at 0.6p/share and further £496,000 through a PrimaryBid offer. This is part of a funding package for the Tulu Kapi gold project. Management says that the NPV8 of KEFI Gold and Copper’s interest in the project, at a gold price of $1,862/ounce, is equivalent to 2.9p/share. The share price slumped 24% to 0.578p.

Lung cancer diagnostics developer LungLife AI (LON: LLAI) has raised £1.8m at 35p/share. Following positive validation study results the commercialisation process is starting. The cash will fund the evidence generating activities, including an early access programme and clinical utility studies. It will also help to raise clinical awareness and enable LungLife AI to investigate licensing opportunities. There should be enough cash until April 2025. The share price dipped 12.1% to 36.5p.

Thor Energy (LON: THR) interims show cash in the bank of A$525,000 at the end of 2023. That is after a A$974,000 cash outflow from operations and investment. The share price fell 11.8% to 1.5p.

Audio-visual services provider MediaZest (LON: MDZ) fell back into loss in the year to September 2023, as revenues declined 17% to £2.34m. Margins did improve and there was an improvement in activity in the fourth quarter. The share price declined 7.14% to 0.065p.

Harland & Wolff awarded preferred bidder status for £100m project

UK Investor Magazine
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Harland & Wolff awarded preferred bidder status for £100m project

Harland & Wolff Group Holdings, the UK-based strategic infrastructure and asset lifecycle management firm, has landed a lucrative contract that could significantly bolster its top line. The company announced it has secured preferred bidder status for the Falkland Islands Port Replacement Project (FIPASS) from the Falkland Islands Government.

Harland & Wolff shares were 13% higher at the time of writing.

If final contract pricing and negotiations are successfully concluded, the Directors estimate the FIPASS project could generate total revenues in the range of £100 million to £120 million over a two-year period. Work on the project is expected to commence later this year.

The project involves the construction, transportation, and installation of four floating pontoons, each approximately 90 meters long, in the Falkland Islands. Harland & Wolff intends to leverage its multiple facilities to spread out the fabrication work.

“Following a competitive bid process, I am delighted that the Falkland Islands Government has selected Harland & Wolff as preferred bidder for this project,” said John Wood, Chief Executive Officer of Harland & Wolff.

“The Company enjoys an excellent relationship and a rich heritage with the Falkland Islands given that Harland and Wolff built the six linked barges which make up the existing port facility 45 years ago. I look forward to working closely with the Falkland Islands Government and bringing this contract to fruition.”

Greggs sales and profit rise as market share increases

UK Investor Magazine
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Greggs sales and profit rise as market share increases

There is no stopping bakery chain Greggs who recorded another year of sales and profit growth as the chain opened more stores and kept them open later.

The UK’s insatiable demand for the humble sausage roll helped Gregg’s total revenue increase 19.6% and like-for-like sales rise 13.7% in 2023.

Greggs is now the UK’s top food-to-go company according to YouGov’s Brand Index and has a total share of visits of 8.2%.

Even though the group said costs have increased over the last year, Greggs maintained healthy margins and underlying profit before tax rose 13.1%.

“Greggs has enjoyed an excellent year despite the challenging economic environment. Sales and profits have both risen, despite significant cost inflation, and the group is returning more cash to shareholders through dividends. All in all, an impressive performance,” said Charlie Huggins of Wealth Club.

In terms of costs, investors will be encouraged to learn Greggs sees cost increases slowing going forward which will be supportive of earnings. Greggs said in a statement: “inflationary pressures are reducing and we have improved visibility of costs in the coming year.”

The company has consistently expanded its presence across the UK with new store openings and opening stores later into the has helped bolster the top line.

“Greggs continues to show why it’s the UK’s leading food-to-go brand (YouGov’s Brand Index). This is a business intent on growing, aiming to surpass 3,000 UK shops while enhancing its multi-channel approach for better service. Digital channels are booming, with delivery sales up 23.6% last year following partnerships with Just Eat and Uber Eats,” said Matt Britzman, equity analyst, Hargreaves Lansdown.

“Greggs is extending hours to capture more of the evening market and bolstering its brand to both deepen loyalty and attract new customers. 

“Greggs is far more than just a treat, and its value offering puts it in a sweet spot with consumers still battling higher living costs. Maintaining that price point is key, and with cost inflation easing Greggs is making sure customers feel the benefit too. That’s likely to be a small drag on sales growth this year compared to last, but there are plenty of other growth avenues to target.”

Strong operating profit growth is translating into higher shareholder distributions with an increased ordinary dividend and a bumper 40p special dividend.

Greggs ordinary dividend isn’t anything to write home about but the additional 40p special dividend means payouts will total 102p per share.

“Investors don’t have to sit and wait while the growth strategy plays out. Greggs already boast a modest 2.6% forward yield and today’s special dividend is further evidence that the board’s keen to pay investors while it expands.”

Canadian firm Carbon Done Right Developments Inc plans AIM quotation

Andrew Hore
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Canadian firm Carbon Done Right Developments Inc plans AIM quotation

TSX Venture Market-listed carbon offsetting firm Klimat X Developments Inc (TSXV: KLX) is changing its name to Carbon Done Right Developments Inc and plans to gain a quotation on AIM early in the second quarter.

The company was a cash shell known as Earl Resources before the acquisition of the Klimat X business in June 2022. The current share price is C$0.07 (C$0.065/C$0.075) and the market capitalisation is C$6.58m (Carbon Done Right Developments Inc Com (KLX) | TSXV Stock Price | TMX Money). There were 250,100 shares traded on Monday.

The company has 57,000 hectares in Sierra Leone and there are plans to increase this to 100,000 hectares. This is unproductive land leased from small farmers. So far, 1,400 hectares of forest and 14 hectares of mangrove have been planted.

There is another project underway in Yucatan, Mexico. That involves restoration of up to 40,000 hectares of degraded mangrove and the joint venture partner is Imperative Global Projects.

The company has entered into an operating, licensing and purchase option agreement with an entity called Carbon Done Right, which is a technology enabled, carbon quantification platform. The remote sensing and monitoring technology is called Carbon Quantification System. This tracks each tree planted, which provides transparency for carbon project managers.  

Revenues are still modest with C$69,000 in 2022 and C$129,000 in the nine months to September 2023.

At the end of 2022, net assets excluding non-controlling interests were C$8.55m. By the end of September 2023, the figure was C$6.14m. That included C$582,000 in cash.

A carbon credit offtake agreement with a Fortune 100 company, which will buy carbon credits from the Sierra Leone rewilding project. This has generated C$664,000, which is included in the balance sheet as deferred revenue.

Klimat X has secured a convertible bridging loan to help to fund professional fees charged in the process of coming to AIM.

FTSE 100 falls despite strong Asian session, Budget eyed

UK Investor Magazine
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FTSE 100 falls despite strong Asian session, Budget eyed

Another day and another trading session in which the FTSE 100 misses out on the broader zest of global equities.

Not even another record high and the break of the substantial psychological level of 40,000 for the Japanese Nikkei fired up UK equity bulls on Monday.

“After starting on the front foot, the FTSE 100 dipped in a seesaw start to the session. The index was dragged lower by financials ahead of this week’s UK Budget,” said AJ Bell investment director Russ Mould.

“A cautious mood pervaded despite Japan’s Nikkei 225 breaking new ground to trade above the 40,000 mark. The push for the index to new all-time highs is undoubtedly a key milestone but whether it truly marks an end to more than three decades of stagnation is still up for debate. One swallow doesn’t make a summer and the fact it has taken since 1989 for the index to claim a new record high is probably cause for some reflection rather than outright celebration.”

Although there was mild positivity in European indices, the FTSE 100 was firmly lower, shedding 0.6%.

BT was the top riser with a gain of 1.8% as the FTSE 100 fell 0.6%. The index was dragged lower by weaker miners, banks and housebuilders.

Ocado fell 5% as the FTSE 100’s biggest faller.

Budget

With the UK government’s last budget before the general election scheduled for this Wednesday, UK-centric sectors will be in focus as investor position for any potential policy changes. 

However, it is not yet clear what to expect from the chancellor, who will have his hands tied by the threat of a rerun of the fallout in financial markets following Liz Truss’s doomed autumn statement.

Jeremy Hunt and Rishi Sunak would like to be in a position to announce a wave of tax cuts to win over voters ahead of this year’s general election, but that may be beyond their reach. Markets will expect business-friendly policies as well as long-overdue amendments to savings products.

The UK government is under pressure to revive UK equity markets, and any fresh measures unveiled this week will be aimed at encouraging retail investor participation in stocks.

“With blue-chip stocks finding it hard to regain their mojo and the swoop on British companies continuing, rumours are swirling that Jeremy Hunt will try and revitalise the London markets, by offering tax incentives to retail investors,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

“While and increase to the annual ISA allowance would be hugely welcome, he should steer clear of introducing a ‘British ISA. This would add unnecessary complexity and could have a negative impact on UK investors.”

The FTSE 100’s housebuilders could have been in for quite a week if Jeremy Hunt announced a 1% mortgage but this has supposedly now been ditched.

Autins continues recovery and appoints new boss

Andrew Hore
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Autins continues recovery and appoints new boss

Thermal insulation and acoustic material manufacturer Autins Group (LON: AUTG) is maintaining its recovery momentum and cost savings helped to reduce the 2022-23 loss. A new chief executive is joining in April, and he has extensive experience in the core automotive market. The share price recovered 6.25% to 8.5p, but this is only just above the all-time low.

The AIM-quoted company has been winning new contracts with automotive manufacturers such as Jaguar Land Rover and Nissan. There has been a positive customer reaction to new products including the 100%-recyclable Neptune-R material.

In the year to September 2023, revenues improved from £18.9m to £22.7m, while the pre-tax loss reduced from £3.55m to £1.04m. Gross margin improved from 22.5% to 29.5%. All the growth was in the automotive sector with other revenues declining – mainly due to the weak flooring market in Germany.

Productivity has improved and there has been a lower staff turnover. Waste has been reduced. Conversion to renewable energy sources has reduced carbon emissions by 88%, although utility costs did rise by £500,000 as forward contracts came to an end.

Net debt declined from £2m to £1.6m. The unused invoice discounting facility provides cash headroom of £4.1m. That is enough to cover the expected debt repayments until the end of 2024.

Andy Bloomer is replacing Gareth Kaminski-Cook on 22 April. He has been head of sales and marketing of a division of Morgan Advanced Materials for the past four years. This has annual revenues of £150m. He has experience with electric vehicles and speaks German – Germany is a key market. There are no forecasts for the current financial year, but Singer believes that full year revenues of £26m are possible. That might have been enough to achieve a small operating profit, but management says that more will be spent on sales and marketing and R&D in the second half. That will hold back improvement in profitability. It is also before the new chief executive comes in and assesses the situation.

Tip update: Hargreaves Services pension deal

Andrew Hore
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Tip update: Hargreaves Services pension deal

Hargreaves Services (LON: HSP) has completed the buy-in of its two defined benefit pension schemes and it has cost less than expected when the process was announced. The deal has been done with Just Group.

There is an initial cash outflow of £7.7m, which covers the £3.7m pension shortfall and a £4m loan relating to illiquid property assets. The loan generates interest and will be repaid when the property is sold or in two years.

The maximum cost of the deal is likely to be around £6.6m, but it could be as low as £3.7m. The final cost will be depending in the level of obligations during ...

AIM movers: Beowulf Mining announces highly discounted offer and Renalytix approach

Andrew Hore
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1
AIM movers: Beowulf Mining announces highly discounted offer and Renalytix approach

A large diagnostics company has made a bid approach to kidney disease diagnostics developer, Renalytix (LON: RENX). This has sparked a formal sale process, so that the company can assess whether there are other potential bidders. It is also possible that there could be a decision to stay independent. Funding options are being reviewed. Costs have been reduced, but there is currently cash and securities of $3.7m and the cash outflows remain significant so this will only last until the end of April. A share issue and/or debt financing will be required. The share price soared 75% to 70p.

Molecular Energies (LON: MEN) subsidiary Green House Capital is making progress towards an AIM flotation. The three main investee companies are making progress with Dual Fuel showing that it can improve fuel efficiency and reduce the use of diesel. It was previously announced that EIS relief eligibility had been obtained. Molecular Energies owns 75% of Green House Capital. The share price recovered 29% to 24.5p.

In-content advertising services provider Mirriad Advertising (LON: MIRI) has secured a two-year agreement with a major US film and TV company, which will use Mirriad Advertising’s platform for virtual product placement opportunities. It is already going to use the platform for one of its highest rated programmes. There are talks with another US film and TV company. The share price increased 15.4% to 1.5p.

Block Energy (LON: BLOE) has revealed an increase in resources for the Rustavi and Teleti fields. An independent engineering report confirms 2C gas resources of more than 2.77 Tcf, which is more than double the previous figure. The NPV10 for the whole of the licence area is more than $1.6bn. This will help to attract potential farm-out partners. The share price is 11.1% higher at 1p.

FALLERS

Beowulf Mining (LON: BEM) has revealed the terms of its cash raising to invest in Kallak iron ore project in northern Sweden and the graphite anode materials plant in Finland. There is a rights issue of SDRs to raise £6.3m, of which £3.8m is underwritten, and a PrimaryBid retail offer at 0.61p/share raising up to £1.6m in the UK raising. Last year, the company raised money at 2.06p/share. A capital reorganisation will reduce the par value of the shares from 1p to 0.1p. The share price slipped a further one-quarter to 0.9p – it has fallen 30.8% this year.

Data analytics software developer Rosslyn Data Technologies (LON: RDT) will make a higher than expected loss in the year to April 2024 because of delays in orders. There are hopes that contracts can be signed before April, but most of these revenues would still be recognised in 2024-25. Cash should last until the end of 2024, but that depends on signing additional contracts. The share price slumped 24.6% to 12.25p. The August 2023 fundraising was at 25p/share.

URU Metals (LON: URU) has extended the repayment date for the convertible loan from Boothby Absolute Return Strategies to the end of May. The amount loaned is $500,000. The share price declined by one-fifth to 50p.

Caledonia Mining Corporation (LON: CMCL) met production guidance with 75,416 ounces of gold produced, but costs were higher than expected. Some of these additional costs were one-offs. This led to Cavendish slashing its earnings forecast from 68.6 cents/share to 15 cents/share. However, it still expects a total dividend of 56p/share in 2023 and 2024, when it may be covered be earnings. The share price fell 14.6% to 675p.

Tekcapital: SP Angel sees 74p per share on successful execution

UK Investor Magazine
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Tekcapital: SP Angel sees 74p per share on successful execution

Tekcapital shares rose on Monday after broker SP Angel said they saw 74p fair value target for TEK shares on the successful implementation of its growth strategy.

The 74p future fair value target far exceeds SP Angel’s existing fair value target of 18p per share based on the current net asset values of portfolio companies.

SP Angel’s current 18p fair value target implies over 45% upside from Tekcapital’s 10.5p share price.

After applying forecasts of future revenue growth and potential profitability, SP Angel said they “arrive at a fair target for Tekcapital on successful execution on the growth opportunities presented of 74p, implying 600%+ upside potential.”

SP Angel applied potential scenarios for market penetration across the portfolio companies to deduce possible revenues and then calculated profit margins using industry-standard metrics.

Guident is the Tekcapital portfolio company SP Angel sees the most upside from the current valuation on the successful execution of its strategy with a potential future fair value of $115m vs a current valuation of $18m.

Guident is the only privately company in the Tekcapital portfolio after MicroSalt listed in February.

The research note is available in full via Research Tree.

Renalytix shares soar after announcing takeover approach

UK Investor Magazine
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Renalytix shares soar after announcing takeover approach

Renalytix, an artificial intelligence-enabled diagnostics company focused on kidney disease, has received an unsolicited acquisition approach from a large, publicly-listed strategic diagnostics company.

In response, Renalytix has commenced a formal sale process to review all available options, including a potential sale of the company or assets. Renalytix said it had not yet received a formal offer.

Renalytix shares were 50% higher at the time of writing.

In February, Renalytix announced the US Centers for Medicare and Medicaid Services published a draft Local Coverage Determination for the Renalytix KidneyIntelX and kidneyintelX.dkd testing at a price of $950 per test. The announcement was followed by further news the coverage of the testing had been expanded to any US government agency conducting kidney testing.

Should the takeover be completed, Renalytix will be the latest UK company to be taken over amid low UK equity valuations.

Renalytix is one of AIMs best performing stocks of 2024 so far with a gain of 280%.

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